On Wednesday local time, the stock prices of Indian business giant Adani (Gautam Adani) plunged again. So far, after the short-selling agency Hindenburg Research (Hindenburg Research) issued a bearish report, the total market value of Adani Group has evaporated by 86 billion US dollars.
Funds have also begun to flee the Indian stock market, and market confidence has yet to be restored.
Adani gives up Asia's richest man
According to Forbes statistics, for Adani, the evaporation of the market value of the short-selling event caused his personal wealth to shrink by more than 50 billion U.S. dollars. His total assets have fallen back to 75.1 billion U.S. dollars, and his ranking on the world's richest list has fallen from No. 8 to No. 1 15, while the position of the richest man in Asia was replaced by Mukesh Ambani, chairman of India's Reliance Industries, who ranked ninth in the world with assets of 83.7 billion US dollars.
In recent years, Adani Group's business has expanded rapidly, involving industries such as ports, airports, mining, cement, and electric power. The soaring stock prices of listed companies have made him the fastest-growing billionaire in the world in 2022.
In September last year, its net worth soared to a peak of US$150 billion, second only to Tesla CEO Elon Musk.
However, a short report put Adani's business empire facing unprecedented challenges.
Hindenburg Research questioned that Adani Group manipulated the stock price of listed companies through entities in overseas tax havens, enabling the company to obtain more liabilities. The report also expressed concern about the high debt and valuation of its seven listed subsidiaries.
Bill Ackman, a well-known hedge fund manager and founder of Pershing Square, questioned on social media that Adani's exposure to bank liabilities is too large.
Adani Group subsequently denied the allegations, saying the claims of stock manipulation were "baseless" and a result of ignorance of Indian law.
In order to gain the support of investors, Adani Enterprises, the flagship company of Adani, opened a US$2.5 billion FPO (follow-up public offering), which is also the largest FPO in India's history. The company successfully received the full amount before the deadline on Tuesday. Subscription intention, the stock price once stopped falling and stabilized.
Adani Enterprises plunged 28% and Adani Port fell 19% on Wednesday. Both stocks set the record for the largest one-day decline since listing. The other five companies in the group Three of the listed companies hit the daily limit, among which Adani Total Gas, a joint venture between Adani and French energy giant Total Gas, has lost $27 billion in market value in the past week.
Faced with stock price fluctuations, Adani Group announced late on Wednesday local time that it would cancel the issuance and financing plan that Adani Enterprises had just completed.
The company said in a statement: "Given the current market relief, the company will protect the interests of its investor community by returning FPO funds and withdrawing completed transactions. Today's market is unprecedented, and the company's board of directors believes that continuing to issue shares is morally right. incorrect."
Time to restore confidence
A drop in Adani Group Inc shares has also weighed on Indian stocks, with India's benchmark Nifty down nearly 3 percent since the release of the Hindenburg Research report.
Third-party fund flow statistics found that foreign investors net sold Indian stocks worth US$1.5 billion in a week, which is also the largest sell-off record since September 30 last year.
When asked by the media whether he was worried that the plunge in Adani Group's stock price would lead to greater turbulence and losses in the Indian stock market, Indian Economic Affairs Minister Ajay Seth said that the government would not comment on issues related to a specific company.
According to sources, the Indian market regulator is investigating the Adani Group's transactions and will add allegations of short-selling reports to its preliminary investigation.
Adani Group shareholder Life Insurance Company of India said this week it would seek clarification from management on the short-selling report.
As of end-December, India Life had a 4.23% stake in Adani Enterprises and over 9% in Adani Ports and Special Economic Zone.
The insurance giant was a major investor in the recent sell-off of Adani shares, the report said.
"The market rebounded slightly after the share sale was completed, but now investor sentiment has turned soft again," said Ambareesh Baliga, an independent market analyst. The actual reaction has not been good, which clearly shows that investor confidence has been damaged and volatility may take a while to stabilize."